The Inspection Addendum
Although not required by law, the standard purchase contract used by the Dayton Area Board of REALTORS® includes an inspection addendum. This addendum outlines on a single page what, when and how the inspections, if any, shall take place on the property that is being purchased, when they shall be repaired, and what will happen if they are not repaired. This form is included in the standard purchase contract for the convenience and security of both home sellers and home buyers.
Clause one sets forth all the negotiable clauses of this addendum. The buyer determines how long (10 days is a standard time period) he/she shall have from the date of the seller’s acceptance of the contract to carry out the inspections on the residence. These may include structural inspections or others, such as the basement, chimney, roof, electrical, plumbing, well (quality and quantity), heating, air conditioning, appliances, termites, septic system, radon, whole house inspection, or any other inspections the purchaser wishes to specify.
By signing the addendum, the seller agrees to the buyer’s inspection terms. It is the responsibility of the buyer, however, to select and pay for the inspectors. The opening clause also makes clear that any damage done to the house by the inspectors is the responsibility not of the seller, but of the purchaser.
The inspector(s) is looking for serious problems that affect the "habitability" of the home. He/She is not looking for minor, routine maintenance and repair items or items already disclosed to the purchaser in writing before the offer was made. For example, dripping faucets, a cracked driveway or peeling paint on the house’s trim do not affect habitability. No water on the second floor, a leaky roof or dangerous wiring does.
In the event defects are found by the inspectors, the buyer is then required to notify the seller in writing. (Failure to do so within the negotiated inspection time frame [usually 10 days] means that the purchaser waives all rights and has, de facto, agreed to accept the property in an "as is" condition.)
Once notified, the seller is then given 10 days to make a choice. He/She can:
repair the defects in a "workmanlike" manner,
make other arrangements (usually by re-negotiating and reducing the sale price) so that the buyer agrees to make the necessary repairs after closing at their expense, or
sell the home "as is."
The buyer may accept the seller’s offer to make repairs, negotiate for additional compensation, or, in the event they are not satisfied, may terminate the contract. The buyer is given five days to decide what to do. In the event they decide to cancel the contract, it is not as if nothing occurred, however. If defects were found, the seller must then add these defects to their Residential Property Disclosure Form. This form, which lists defects on the property known to the Seller at the time of sale, is required by the State. Failure to list all known defects is against the law.
The Inspection Addendum concludes with a written statement that the purchaser has indeed received a State of Ohio Residential Property Disclosure Form. This form, however, is no substitute for inspections.
Inspections and the inspection addendum are an attempt by REALTORS® to make real estate transactions in this State increasingly clear, open and mutually beneficial to both parties. As professionals, it is the goal of every REALTOR® to insure all parties in a real estate transaction are well served. Let us serve you in your next transaction.